Tullow again rejects Block 9 sellout
Star Report
Irish company Tullow once again categorically rejected the Block 9 share sale of its partner Chevron-Texaco to Canadian company Niko Resources, accusing it of violating various legal aspects of the production sharing contract (PSC).In a letter to the Chevron International Bangladesh Ltd. (CIBL), Tullow said that as per the contract Chevron-Texaco did not obtain prior written sale approval from the government and that the CIBL did not even have the legal basis to sell its 60 percent shares in the block. The CIBL in its September 16 letter to Petrobangla pulled up a surprise by announcing that it has sold out its equity to Niko. The CIBL looks after the shares of Chevron and Texaco, the two American companies that took control of 30 per cent shares each back in April 2001 when the PSC was signed. Chevron and Texaco merged later that year. On Saturday, Niko in an announcement from Canada, declared that it has assumed all obligations of Chevron-Texaco under a purchase deal, effective from January 1, 2003. However, Petrobangla has already rejected the CIBL sale saying that the PSC demands any such sale is subjected to prior approval of the government. It also pointed out Texaco's 30 per cent share transfer to the CIBL has not yet been approved by the government. Therefore, the CIBL does not have the legal footings to sell out 60 per cent shares. Tullow's letter was issued Friday by its Legal and Commercial Director A Graham Martin in line with Petrobangla's stance. The CIBL does not hold 60 per cent shares of the block, states the letter. As per the PSC and Joint Operating Agreement (JOA) of Block 9 partners -- Chevron, Texaco, Tullow and Bangladeshi company Bapex, which holds 10 per cent share -- Texaco Bangladesh is still the owner of 30 per cent equity. Tullow sought clarification from the CIBL in this regard. According to Article 12.2 of the JOA and Article 31.3, the CIBL needs prior written approval of the government, Petrobangla, Tullow, Texaco and Bapex. "Tullow has no inherent objection to Niko…but we are concerned to ensure that any proposed transferee satisfies all the requirements of the PSC and JOA before the transfer becomes effective," it said. It also criticised the secretive way the CIBL sealed the deal. "Chevron-Texaco seeks to transfer their obligations to Niko without demonstrating to Tullow or Bapex how their interests are to be protected. This is unacceptable behaviour." The partners should have been approached first when the CIBL wanted to sell its shares, argued Tullow.
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